their expedited process. i would like to direct the funds, as mentioned earlier to the following amount, 25% to be applied to the city's small site housing acquisition program, and 75% to the city-wide affordable housing fund. to be deposited into separate accounts to be administered by the mayor's office of housing for the purpose of expanding low and moderate housing [speaker not understood] in san francisco, including but not limited to expand public housing opportunities. i believe as i have said all along, that we want to encourage real homeownership opportunities for all san franciscans and make our city inclusive and affordable to all. i think this legislation would do so with these amendments. and i've spoken to several of my colleagues on the board about this amendment in regards to where the funding would land. and i've gotten good positive feedback with this.

thank you very much. >> supervisor kim. >> thank you. so, i just want to speak from the perspective as a member of this board that was strongly opposed to the originally proposed condo conversion ordinance as i read six months ago and i really want to explain where my perspective came from before we got to the place where we are today. over the last 10 years here in san francisco, we've actually averaged 500 condo conversions on average a year, not just the 200 number that is frequently touted in the media. between 2001 and 2011, 5,9 56 condos were converted. condo units were converted and approved, an average of 541 units per year. ~ these are 541 units that had previously been under rent control. in the previous decade, only 2,863 were approved. in the last two decades we've

seen 100% increase in allowed condo conversions over the last two decades. we talk a lot about increasing opportunities for homeownership here in the city, but i absolutely believe the answer to that is in the construction of new units and not just new units in the south of market and bayview and mission bay, but all across the city. instead of rating one existing housing stock which is rent control which tenants depend on and regarded as our middle class housing stock, the originally proposed ordinance in many ways would perceive this favoring one set of san franciscans, against middle class and low-income tenants. the intent of the original proposed ordinance was to "assist tic owners who are in dire financial straits to help keep them in their homes." but the silence behind this type of ownership which i believe tic owners didn't know or realize, these units were once the home of tenants who were displaced at great opportunity for tic and condo

conversion which would permanently take these units off of the represent controlled housing stock and that we as policy makers would not be working to help existing tenants in their homes. but i walked into the hearing with an open ear to both sides. this modified ordinance that is before us today with amendments by president chiu, supervisor yee and myself, balances the field by supporting both groups of san franciscans. while we can argue about whether current tic owners are truly in dire states with the widespread ability of fractional loans which several of my tic friends have taken advantage of, and historically low rate of foreclosure here in san francisco, i understand tic ownership is in place for 2000 units and that eventually these units will undergo condo conversion the next ten years. in fact, in the 2013 lottery, 2,269 units registered for this lottery. so, we worked closely with all parties to craft a compromise

solution which would both expedite conversion for existing tic owners while protecting current tenants from future cannibalization or speculation of their units by instituting a 10 year moratorium [speaker not understood] this quote-unquote replace many of rent control housing stock would allow a condo conversion number. i believe that this legislation does address the need of current tic owners who came out to speak in numbers at land use committee meetings while addressing the sphere of tenants in a bypass to flesh out current units waiting in the lottery, spurring speculation for realtors on virgin rent control buildings to convert to tic and eventually condos. if we are truly just trying to help these current san francisco tic owners and we do not support future realtor speculation, as i have been told over and over again from the last six months about this legislation, then we must vote to support this measure. this measure does simply that. i also believe the changes to

the future lottery were thoughtfully done considering the type of homeowners we were truly trying to support and that is the average middle class homeowner family. the average middle class homeowner does not have the resources, the skills, the time to purchase five, six-unit buildings. these large buildings, although they are exceptions are mainly put together [speaker not understood]. two three-unit buildings are many parameters of what homeowners can take over. if we truly want to support families that want to live in san francisco, they need to live in their residences three to six years. this is a modest amount of time if you're truly trying to be a permanent owner here in san francisco. i believe the passing option does not make sense. why are we as policy makers trying to help people who only want to own a home in san francisco for two years at the expense of tenants who are currently struggling to stay and live in san francisco? as supervisor avalos mentioned

earlier, the average rent for a two-bedroom unit here in san francisco is 3200. i also rent a two-bedroom here in san francisco and i pay more than that. we need to do more to help our current tenants than someone who wants to own for one to two years and move on. the controller's office estimates these tenant converted units will spend between 800,000 and $1.1 million due to displacement and de-rent control if we do not have the lifetime lease option. i believe that was an important aspect that was originally put in by both supervisor farrell and supervisor wiener in their original legislation and i support that as well. i believe that supervisor yee and chiu spoke at length about what i call the inseverability clause sometimes called the poison bill. i think it's been explained and it's actually been narrowed a lot to ensure that we are trying to have the type of outcomes that we need to protect at litigation.

~ pill so, i'll just end to say that while the generation of dollars for affordable housing or public housing is a nice concept, the fees honestly don't raise enough to truly impact the production of affordable housing by offering a one for one replacement for the units or be able to seriously address public housing budget gap. aside from the aspects i've not happy with such as including 4 building units in future lotteries and that we're not raising enough [speaker not understood], that is a compromise. every side does not get 100% of what they want, but we're able to find a balance that provides real solutions. and while complex, i believe that the outcome is very simple. actually the last thing i'll say is tenants aren't threatening to leave the city if they don't get their way. they are letting us know that they will be evicted and forced to leave the city that they love. and that they are desperately holding onto if we don't figure

out one way to slow down the factors forcing them out. condo conversion is one of them. i know this is a route for a way for many of our folks to own homes. i hope in the future we work a lot how we're going to develop new construction in the city and throughout the city. thank you. >> thank you, supervisor kim. supervisor breed. >> thank you. i spoke in detail about this legislation last week at the land use committee. i won't go into those details, but my thoughts and concerns remain the same. a few months ago we began with a simple premise that we must help tic owners while also protecting renters. i think everyone agreed with the ultimate goal. 9 legislation before us does several very important things. it protects tenants currently living in tics by providing them with lifetime leases. it [speaker not understood] a wave of ellis act [speaker not understood]. and it incentivizes the

construction of more permanently affordable rental housing and raises over potentially over $20 million for affordable and public housing to help lower income residents find a home in san francisco. but the legislation before us fails to ensure its basic premise. if anyone files a lawsuit, it will help to fail the 2 or 3,000 middle class families we set out to help. in fact, it will subject them to a far worse situation than they are already facing. i want to be clear that i support the policy in this bill. i offer an amendment today to not change the policy, but to try and protect it. section 7, the last paragraph of the bill says if anyone files a lawsuit, every measure to help tic owners will come to a complete stop. someone could file a lawsuit the day after this law goes into effect and there will be no conversion. there will be no lottery, and no way to reduce these mortgage rates. and the thousands of tic owners

who are already struggling will now face another 10 years of hardship. these tic owners are not speculators. they're not even wealthy. many of them are former renters themselves and they are now middle class families who need help. we all agree to help them, these tic owners. everyone at the table has acknowledged that goal and we have crafted legislation to achieve this goal. but there is a glaring hole and my amendment seeks to plug that hole. my amendment provides a one-year period after the filing of a lawsuit for existing tic owners to apply for conversions. currently, if someone files a lawsuit on day one, no one will be able to convert potentially for the full ten years. to be clear, no tic currently has an application in place. not even previous lottery participants. my one year interim will allow for the first class, the most

senior eligible owners to apply for conversion after the suit is filed. that's about 500 tic owners. then per supervisor chiu's previous amendment, there's 180-day period for the department to process those applications. the 545-day figure is 365 days for application plus 180 days for processing. after this one-year interim period and the 180-day processing, there is no additional converting during the litigation. and this town i think we should regard as lawsuit as inevitable. with this amendment, no matter what, the legislation will at least help the most senior tic families and all of the important tenant protections remain in place. this is a modest and reasonable change to a very complicated bill. as a former advocate and now as a policy maker, i recognize that i don't have all of the answers. this bill has been very well

thought out, but i don't think it has all the answers, either. it is complicated and i don't think it's wrong to suggest that there are small opportunities for improvement or outcomes [speaker not understood]. this body is charged with making policy for san francisco. we are not obligated to simply object and accept what is presented before us. i value the opportunity to vet this bill with all of my colleagues and i appreciate your consideration of my amendment. it is a small but really important change to a very valuable piece of legislation. thank you. >> thank you. supervisor wiener. >> thank you very much, mr. chairman. and i, too, want to thank all the people who participated in this process. this has been [speaker not understood] process. although there have been a number of disagreements, i think a lot of people have participated in good faith in trying to move us to a spot

where we could actually have a consensus piece of legislation that helps both tic owners and tenants. and frankly, i think we are extremely close. and even if you look at the two versions that are before us today, despite some of the [speaker not understood] a lot of the commentary about there are very different pieces of legislation, there's actually not. there is one difference between the two. the so-called tacking that supervisor farrell described before. but just backing up and looking at the big picture, the one thing perhaps that we can all agree on is that we have a housing affordability crisis in san francisco. i've lived in the city for 16 years, not as long as some, but for a teetion entitle amount of time and have been through some ups and downs in the housing market in the city. ~ decent and i've never seen it as bad, not even close as it is today.

and with the cost of -- whether it's buying or renting, it is completely out of control and it's scary. we have a lot of work to do to try to address that issue, and it is that kind of crisis is almost inevitable when you look at a city that's had the population growth that we've had over the last decade, and that we intend -- we anticipate having over the next decade, and yet in 2011 we added a whopping 250 or thereabouts units of housing. and i think maybe a thousand or 2000 in 2012. when you increase your population by 100,000, probably another 150,000 to come in the coming decade, you add that to the amount of housing, you are going to create a housing affordability crisis. that's what we've done and we need to change that. we need to look at things like in-law units and other ways of increaseving our housing affordability and rent control is definitely ~ a part, a good

part of that solution. despite what some have said, and there has been a lot of melodrama and hyperbole and outright misrepresentations over the last six months about this legislation, i am and have been a strong supporter of rent control and i have a public record to prove it. if you go back 10 years, for 10 years i have been casting votes, public votes democratic central county committee even before i was on this board, and i have a record that is overwhelmingly in favor of rent control. i have supported numerous pro rent control measures on the ballot. i supported he will its act. it is hard to use it [speaker not understood]. i supported this action before i was a member restricting condo conversions for ellis act evictions because we should not be oozing -- no one should be allowed to use the ellis act do

generate condo conversion. so, my record speaks for itself. it is public and it is verifiable. when we came to do this legislation, my melt vation from the beginning -- and i said this during my campaign and i have been consistent for years on this issue -- that we need to protect renters and protect rent control. but tic owners are also part of this city. it's not just because district 8 has the highest tic rate in the city. despite what some said about trying to characterize tic as real estate interest [speaker not understood], or spinning the drops out of the sky and invaded our city, these tic owners like renters are san franciscans, they are our neighbors. the tic owners that i know and i have met over time are long-time residents of this city, often long-time renters who were able to scrape a down

payment and get into a tic. many of them are now struggling paying twice the interest rate that other homeowners are paying. that was the motivation for my participation in this legislation and i decided to introduce -- and in fact, it was at my insistence we included in the original legislation a requirement that every single unit that was converted that had a tenant in it that every single one of those tenants, not just senior and disabled would receive a lifetime lease. that is more protection than tenants who are not protected currently receive if their building wins a lottery. every tenant would receive a lot time lease. i thought that is extremely important and that as been in this legislation from the get go. we didn't having? e something lesser and have a negotiating chip. for me that was a bottom line and it's always been in the legislation. once the legislation got amended. i continued to keep a very, very open mind about the

changes in the legislation. i was never as concerned about the 10 year moratorium as somewhere. i thought that was reasonable given we would allow 2,500 and units to convert. i did not have a problem with the revived lottery [speaker not understood] removing 5 and 6 units buildings. to me it should be focused on smaller buildings. i did not have a problem and do not have a problem with increasing the owner occupancy threshold in the future revived lottery after the moratorium because tics and condo conversions should be focused on owner occupied buildings. and, so, as i have said repeatedly at committee, we are very close. the key aspects of this legislation are aspects that i'm very open to and i think that with some changes from the tenant perspective, we could have, i hope, a unanimous vote here. one of the problems is the poison pill and i want to thank

president chiu for making amendments and supervisor breed as well in trying to cure some of the problems with the poison pill. the poison pill in the legislation that is currently before us is one of the most unfair pieces of public policy that i have ever seen where it would take current tic owners even if thisthey were 100% occupied [speaker not understood], and prevent them from ever condo converting. so, i'm glad there are some amendments that will improve t. i don't think it's quite where it needs to be but it has moved in the other direction. the other issue and i have said this repeatedly in committee, the attacking issue. i hate that phrase because people on the street don't know what it means. i want to explain why it's important. right now in our lottery system, if you are a tic, if you are 100% tic owner in the lottery, you get seniority the

longer you're in the lottery. if you're the senior, the most long occupied -- owner occupant has to sell, i don't agree that selling a tic means that you're not committed to the city. peep have to leave for different units. maybe they have to move out of the city for a job or for family reasons. ~ there are all sorts of reasons why people need to sell. right now if you sell, you can then lose your seniority and go all the way to the back of the line. now, when you're going to increase the owner occupancy requirements from one out of four or one out of three to three out of four or two out of three, and you have that same rule that if you sell your unit, you can go all the way to the back of the line, that exacerbates that situation significantly because you have a higher owner occupancy requirement. it is harder to maintain the same set of owners for a long

period of time. and, so, we made i think what was a reasonable request and that is when the lottery comes back to life after the 10 year minimum moratorium that there would be a certain level of ownership transfers that would be allowed that would not put you at the back of the line. it wouldn't affect a number of units to be condo converted every year. that would still be 200. it would simply have to do with the order by which they convert. so, we made the request. what we proposed is that you can't transfer a unit more frequently than once every three years. could be no more than once every four or five years? yes. could it be maybe one transfer per unit? yes. but i think we need to recognize the reality that people don't always hold their unit forever. that is the striking difference between these two provisions, that so-called tacking provision which is extremely reasonable and that frankly should be in this legislation. and without that, as i stated

before, i have a real problem supporting the legislation. so, we are not that far apart. i think it is very sad that these negotiations end and had that we weren't able to broker a compromise through a negotiation on the so-called tacking provision like apparently seems to be moving in a positive direction on the poison pill. but i guess that's politics and that's life, and we are where we are. i hope that today people will consider an amendment to include that tacking provision. but if not, i will not be able to support this legislation. thank you. >> thank you. supervisor cohen. >> thank you very much. actually, my question is for the city attorney, mr. malmed. we have two [speaker not understood] that could address the poison pill. i wonder if you could explain to us the two options w provided by supervisor chiu and one provided by supervisor breed. >> john malyou med from the city attorney's office.

through the president. ~ the proposal by supervisor breed was based on the current version that's pending before you and which if there were a lawsuit against either the tenant protection provision or the what you're referring to as a ten-year moratorium on the lottery, the current version says that no new applications will be accepted by the department of public works. if you already have an application submitted, you'll have six months to obtain tentative approval of the application. and if you do so within six months of the filing of the lawsuit, you can proceed to a condo conversion. or if you already have a tenant approval at that time. so, that's what is before you today in both of the versions. what supervisor breed has

proposed is to amend that provision to allow when a lawsuit is filed, to allow applications actually to continue to come in and be approved for a one-year period after the filing of a lawsuit. at the end of that one-year period, no new applications would be allowed to be submitted. but if you have your foot in the door basically at that point, you would have 18 months to obtain tentative approval of the application. and then you could proceed to condo convert. or if you have already have tentative approval, you could convert. so, that is the supervisor breed's proposal. supervisor chiu has proposed for amendment today three different scenarios depending on what provisions are the subject of the lawsuit, and they each have three different outcomes. so, the one that's most similar to the existing provision is if

there is a lawsuit to just the moratorium provision, which is suspending the lottery for 10 years, it's as i just explained. no new applications would be permitted. if you have a pending application, you would have six months to get tentative approval. and if so, you could proceed to get approval. if you already have tentative approval, you could proceed down the conversion path as well. but that's only in the situation if you -- if the lawsuit is for the moratorium. if the lawsuit is against the tenant protection provisions, the lifetime lease provisions, then no new applications could be submitted and only those projects that at that time have tentative approval could proceed to get the conversion. however, there is an tension to that, which is if there is a

building out there that has no non-owning tenants, essentially it would probably be mainly 100% tenancy -- owner occupied tenancy in common buildings. any of those, whether they have an application or not, because there's no tenants in the building and the focus is the tenant protection provision, they can proceed to convert under the expedited process. whether they have submitted an application or not. so, that one group can proceed at any time. if there is a legal challenge to both provisions -- so, if someone would challenge both the lifetime lease provision and the moratorium, under that scenario no new applications would be allowed to be submitted to the department and only those that already have tentative approval at the time of the lawsuit could proceed with the condo conversion.

so, each amendment treats i think probably the primary difference is how existing applicants or those who haven't yet applied would be treated if there's a lawsuit that's filed against the city. ~ -- >> thank you. >> thank you. supervisor farrell. >> thank you, mr. chairman. i just want to talk about two things in particular. first of all, and i appreciate everyone's comments on this debate. i know -- i acknowledge it's been a very long road. as supervisor wiener mentioned, it is a shame that we're here today because we're very, very close on just a number of issues and it's really fourthctionv ~ unfortunate in my opinion that folks have walked from the table because i think we are close and no one would have spent this amount of time on this issue had we not wanted to find a common ground compromise. a few things that cropped up in terms of topics i want to make sure i address. first of all, the notion of current tic owners versus future tic owners, the original

intent of this legislation was all around helping current tic owners. and, again, i've heard from so many dozens, hundreds of folks who are really struggling today and we want to provide them security and provide tenant protections at the same point in time. and we did that with what we originally introduced. but at the same point in time, i'm not willing to support legislation that in the future restricts middle class homeownership opportunities here in our city. i think it's the wrong public policy for our city to do that. i think as was echoed before, we need to provide all types of housing opportunities, rental stock, homeownership opportunities at various different income levels. and this -- tic market has done that and will continue to do that. i think would be an absolute disaster if we tried to eliminate it from our city's housing stock. second of all, in terms of the poison pill -- and i appreciate the amendments that have been offered, in particular supervisor breed's, you know, and i appreciate the comments or the opinion that this does

not incentivize anyone to sue or doesn't give anyone the real impetus to sue. i completely disagree with that. the way they're structured now, unless we approve supervisor breed's amendments, unless we do that, on day one someone can sue and take the bypass and ground it to a halt and take the existing condo lottery and grind it to a halt. nobody will have been able to participate through the expedited conversion process at all and the current lottery stops. if you're explicit goal ask to absolutely wipe out the condo lottery then that's what you should support. ~ your but why supervisor breed's amendment is so important is it gives people time to go through the bypass and i think that is critical here. anything else is completely restrictive and i think we should all support that. >> thank you. supervisor tang. >> i actually have a point of clarification question for the city attorney regarding the amendment offered by supervisor breed. just in terms of when -- there in the language i'm not clear what would happen in the case

there are several lawsuits. it says upon service of the lawsuit. are you talking about the first one? so, if you can clarify that, that would be great. >> john malmed from the city attorney's office. through the president. we haven't explicitly addressed the situation where there might be multiple successive lawsuits and what happens. i think a fair reading of the language a has been proposed, it would be the first lawsuit that triggers the one-year period to have new applications come in and it would be based on that, that the additional 180-day period would be added on in order to get tentative approval. it's certainly up to the board if they wanted to specify that if the time periods run from the filing of the first lawsuit, that could be something that you propose.